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Microsoft Propping Up Facebook At This Point

Valleywag talks about the fact that has been thrown around recently that Facebook is a good buy because they will earn $100 million this year and turn a profit, and how that’s a bit misleading. The part people fail to remember: Microsoft made a deal with Facebook almost a year ago to provide advertising for Facebook, guaranteeing a certain amount of money to Facebook through 2009, so Facebook might not actually be making any money except the money that Microsoft owes them.

On the other hand…

Microsoft is in the unique position of knowing first-hand how much money Facebook can pull in through advertising. They sell Facebook’s ads, track their page view stats, analyze conversion rates, in short, they know everything there is to know about Facebook’s commercial viability. If Microsoft bought Facebook, you’d know that Facebook was doing better than everyone thought, because Microsoft is in position to make the most informed possible decision.

Of course, if someone else buys Facebook, Microsoft gets less than $10 million in return. They probably should have bought a stake in the company instead.

July 18th, 2007 Posted by Nathan Weinberg | Advertising, Corporate, General | 2 comments



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2 Comments »

  1. Wow, I had no idea they had ties like this. Microsoft buying them isn’t a bad idea, in a business sense. It’s at least way better than MySpace.

    Comment by Michael | July 18, 2007

  2. facebook is growing fast, in general the future of communication is in control of the social mobile networks. Their growing past each one attaacts a different audience, peekamo hit their audience on a more persoanl level through text, facebook is hitting everyone through pics, groups. Networking is now a business itself.

    Comment by kory | July 18, 2007

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